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As any advisory business grows, eventually the work that was “always” done by the founder has to be delegated, as there’s just not enough time in the day to do everything. Yet speaking from personal experience, delegating can be difficult, as it often feels like it takes even more time to show someone how to do a task and oversee it, than it takes to just do it oneself!

For me, the “breakthrough” in how to delegate effectively came from using screencasting software – tools that record what’s happening on your computer screen, paired with the audio of you talking while you’re sitting in front of it. The end result – in the time it takes me to actually do the task, I can create an entire “how-to” video tutorial for whoever I wish to delegate the task to in the future… and by recording it, I’ve acted once created a guide that can be referenced again and again as necessary for whoever will be doing the task in the future!

In fact, creating videos of the tasks you delegate can be done so quickly and easily that you may ultimately find yourself forming an entire video library of the key “processes and procedures” of your business… where all you have to do is just do the task you’ve long done already, but record it and then delegate it for good! So if you have trouble delegating, you might want to check out screencasting as a very practical solution!

Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with several big news announcements, including President Obama's public endorsement of the Department of Labor's looming fiduciary proposal, Envestnet's acquisition of robo-advisor-for-advisors platform Upside Advisor barely more than a year into its existence, and the decision of Fidelity to merge its broker-dealer and RIA custodian clearing units into one while also creating a new Fidelity Wealth Technologies division to push forward the company's increasing focus on next generation technology.

From there, we have several investment-related articles this week, from the emerging "existential" crisis for indexing (and whether non-cap-weighting indices like fundamental indexing represent true "indexing" at all), to whether rebalancing really does increase returns or not, to the opportunities of "local investing". There are also discussion of the surging popularity of cash balance pension plans for high-income professionals and small business owners, a nice "lessons learned" article about the world of investment management, and an interesting look at whether owning long-term Treasury bonds might still make sense even at today's low rates (think: defending against deflation risk that could take rates even lower from here).

We wrap up with three interesting articles: the first is a look at the life of 109-year-old Irving Kahn, an investment adviser who started in the business in 1928, profited by shorting stocks in the crash of 1929, and ultimately went on to become a deep value investor after working as a research assistant directly under investing legend Benjamin Graham; the second article is a discussion of how parents should properly set allowances for children, suggesting that most parents do not give children nearly enough responsibility with money early on when it can be best used to teach important lessons about values; and the last is a look at how the "Uberization" of work could lead to an entirely new era of how we find employment and earn money, that may allow for more flexible work than ever, but also lead to a significant decline in the stability and security of employment, with profound ramifications for how we give career, earnings, and saving advice to young people today.

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, including the Envestnet acquisition of Upside Advisor, the "Superfish" vulnerability on Lenovo laptops, and a new integration from mobile dictation service Mobile Assistant!

Many readers of this blog contact me directly with questions and comments. While often the responses are very specific to a particular circumstance, occasionally the subject matter is general enough that it might be of interest to others as well. Accordingly, I will occasionally post a new "MailBag" article, presenting the question or comment (on a strictly anonymous basis!) and my response, in the hopes that the discussion may be useful food for thought.

In this week's MailBag, we look at the issues to consider if you want to change where you live, but are concerned about whether the relocation means you'd have to sever all your existing client relationships and "start over" or not. Fortunately, the answer is that while not all clients be willing to stick through you in a transition, today's technology tools make this more feasible than ever before, and the key is to start interacting with your clients more virtually now, so that by the time you actually move it won't be such a big deal anymore!

Retirement accounts and annuities used as accumulation vehicles can create significant tax-deferred account balances over time, with the caveat that eventually the tax bill must still come due. If the accounts are liquidated during life, the account owner faces the tax consequences; if the accounts are held until death, the tax liability falls to the beneficiaries instead. To help ameliorate the potential for a large liquidation to thrust the beneficiary into higher tax brackets after the death of the owner, Congress created the “stretch” rules for retirement accounts and annuities that allow distributions to be taken in small amounts over the life expectancy of the beneficiary.

However, the rules for stretching an inherited account are more problematic in the case of a trust as the beneficiary, because a trust is not a living breathing human being, and therefore doesn’t have a life expectancy to stretch against! In the case of retirement accounts, the IRS and Treasury have created the “see-through” trust rules that allow post-death required minimum distributions to occur based on the life expectancy of the underlying trust beneficiaries. However, in the case of annuities, no see-through trust rules exist, compelling trusts to instead liquidate inherited annuities over the far-less-favorable 5-year rule!

As a result, consideration of whether to use a trust as the beneficiary of an annuity must weigh the adverse tax consequences against the favorable/desired non-tax provisions of the trust. In some situations, using an annuity’s own beneficiary designation with “restricted payout” may be a viable alternative, saving on both the cost of the trust itself and preserving the stretch. However, in situations where it is most important to limit a beneficiary’s access to a trust – such as irresponsible spendthrifts, asset protection, and estate planning scenarios – there may be little choice but to accept the less favorable tax treatment, at least until/unless the rules change!

Celebrating its 10th year as an event, this year’s Technology Tools for Today (T3) advisor technology conference was the biggest ever, punctuated by a stream of major product launch announcements at the conference itself, and buzzing about the literally billions of dollars of merger and acquisition activity for advisor technology firms in the two weeks leading up to the conference.

The breakout categories at this year’s event included several new “Personal Financial Management” (PFM) tools for advisors to work collaboratively with their clients, including the launch of EMX Select from eMoney Advisor (which, finally, will be “unbundled” from their financial planning software!) and a new solution called “Narrator” from Advicent (maker of NaviPlan and Financial Profiles). Also highly visible at this year’s T3 conference were an onslaught of more than half a dozen new “robo-advisor-for-advisors” solutions, all seeking to bring a better technology platform for advisors to build their businesses and automate much of the onboarding and investment implementation with their clients.

Yet underlying the potential efficiency of all these new technology solutions is the ongoing challenge that for many advisors, working with smaller clients isn’t actually a matter of efficiency (which technology can solve), but a marketing problem to get a sufficient volume of those clients in the first place. And while several new technology solutions are aiming to automate more of the advisor marketing process, along with making advisor websites more engaging with a series of “self-help” tools that can get prospective clients interested in actually working with an advisor, the question remains: how many advisory firms have a good enough marketing process to actually leverage these tools in the first place?

Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with two big news announcements, including a new $60M round of venture capital for robo-advisor Betterment that will be used in part to build out its robo-advisor-for-advisors solution Betterment Institutional (with a reported 90 RIAs already using the platform), and a detailed review of Form ADV for the new Schwab Intelligent Portfolios "robo" solution as well that reveals the platform will only be "free" because its 30bps management fee will be covered by the profits Schwab makes on its underlying ETF and bank offerings (including a 7%-30% cash allocation in all portfolios!).

From there, we have several practice management articles this week, including a look at how doing financial planning for Millennials means retooling the advisor's services (and business model?) away from AUM-centric retirement accumulations and towards building "financial independence" instead, an interview with "Reformed Broker" and financial advisor Josh Brown as he approaches 100,000 Twitter follows about how his blog and social media presence helped to build a $170M AUM practice, a look at the importance of effective branding and communications for advisors, and some tips on how to publish an "e-book" to establish your credibility.

We also have a few technology-related articles, from a look at how to better "personalize" and humanize the ways you use technology with your clients, to software reviews for the latest Tamarac iPad app and the newest release of eMoney Advisor's financial planning software (dubbed "EMX").

We wrap up with three interesting articles: the first is a letter from CFP Board chair Richard Rojeck as the organization celebrates its 30-year anniversary, looking back at what has been accomplished and where the CFP Board still sees opportunity from here; the second is a review of the recent new book "The Incredible Shrinking Alpha" by Larry Swedroe looking at how the competition for alpha is fiercer than ever (which makes less and less of it available to capture); and the last is a great reminder that helping clients through the stressful times can be stressful for the advisor as well, so now - while markets are relatively calm - might be a good time to take a "reboot", and make sure you're fresh for when the next inevitable bear market finally comes.

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, including highlights of the Technology Tools for Today (T3) conference, a review of the news that Betterment has raised another $60M of venture capital (in part to support its new service for advisors, but also to expand its capabilities to answer basic financial planning questions), and more!

Every year, the proposed changes to the tax laws encapsulated in the President’s budget request for the Federal government are recorded in the Treasury Greenbook, which is then taken under advisement by Congress to create its own budget resolution. And while the President’s budget request does not necessarily dictate what Congress will decide to do, it does provide valuable insight into potential legislation that may be considered in the coming months and years.

While some tax proposals in the Greenbook are relatively minor, or pertain to issues not directly relevant to our work as financial planners, this year’s FY2016 budget request had several proposals that would represent major changes in the world of planning for retirement accounts, both during clients’ lives and after they pass away.

In recent years, there has been a growing interest in both high-profile acquisitions of advisory firms, and a more general “urge to merge” as the increasing costs of running an advisory firm drive more to seek scale by banding together. Yet while the industry discussion often goes to the favorable results of the biggest mergers with the greatest success, the reality across most industries is that anywhere from 70% to 90% of mergers and acquisitions, and there’s little reason to imagine that advisory firms would be any different… suggesting that at least some of the vaunted benefits of large ensemble practices may be distorted by a significant survivorship bias.

Seeking to explore this issue further, a new industry white paper on “Best Practices in Investment Advisory Partnerships” has delved into what makes advisory firm partnerships work, and what causes them to fail… cultivated from both the experiences of the authors (who themselves were advisory firm owners who went through a problematic merger) and interviews with dozens of advisory firm partners of businesses both large and small.

What emerges from this new exploration of advisory firm partnerships is the idea that in more ways than a few, an advisory firm is like a marriage, where deep trust and a mutual commitment to the success of the relationship is crucial to navigate the inevitable conflicts that will arise over time, and that while every individual and partnership is different to some extent, the triggers of partnership problems are far more consistent than most might expect.

Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with the latest big acquisition news, as a private equity firm acquires portfolio accounting and reporting solution Orion Advisor Services, marking the last of the major RIA portfolio accounting platforms that have been acquired (after last week's Advent acquisition). And notably, the deal caps a series of massive Advisor FinTech acquisitions that dramatically trump all the dollars that have ever been invested into "robo-advisors", suggesting that the big money sees even more opportunity in serving advisors in the long run (rather than competing with them!). Although also in the news this week were some further details from the looming Schwab "robo-advisor" solution, which the company announced is targeting a whopping $400 billion of AUM through both its retail and advisor channels!

From there, we have several practice management articles this week, including a look at how advisory firms with strategic plans fleshed out to the point of having actionable implementation steps are outpacing the growth of firms without a strategic plan (or with one lacking the specificity to actually implement), how often the greatest challenge a firm's advisor-owner faces is the need to change his/her own perspective to move the business forward, and some tips on what to think about when crafting communication as an advisory firm (from what to include on your website for prospects, to how to work with the media effectively).

We also have several more technical articles, from a review of the some of the popular "cutting edge" estate planning strategies in use for higher net worth clientele who still face a Federal estate tax problem, to an in-depth look at all the different types of long-term care insurance (traditional LTC, hybrid coverage, etc.) and how to compare them and evaluate which is best and when, and a discussion of the problems with many of today's life expectancy calculators and what to consider if you decide to use one. There's also a discussion of retirement researcher Wade Pfau's new launch of the "Retirement Wealth Index" and the "Retirement Affordability Index", which are meant to give today's retirees some perspective on how good/bad of a time it is to retire.

We wrap up with three interesting articles: the first is a poignant reminder from advisor Ric Edelman that as both an advisory firm grows and changes, and the industry and environment changes around us as well, that whatever got us to where we are successfully is rarely what works to keep us moving forward from here; the second is a fascinating glimpse at a recent study suggesting that as self-driving cars become a reality in the coming decade, the need for vehicle ownership could drop by more than 40% (drastically reducing what clients need to budget, both for a car, and for that 2-car garage!); and the last is an interesting reminder that the whole central role that money plays in our lives today is actually a relatively "recent" phenomenon since World War II, and that in fact the rise of financial planning and its whole reason for being may ultimately boil down to helping us relate in a healthy way to money and the powerful role that it plays in our lives.

Earlier this month, President’s Obama released his budget request for the Federal government for the coming 2016 fiscal year. Included in the budget are a long series of tax proposals, summarized in the so-called “Treasury Greenbook” that provides an explanation of each proposal and what it would entail.

While the tax proposals in this year’s budget span a wide range of categories and topics, the proposed retirement changes are significant, and include some good, some bad, and some that are downright ugly. This week, we review some of the good (eliminating RMDs for those with less than $100,000 of retirement assets and allowing inherited IRA rollovers for non-spouse beneficiaries) and the bad (Roth crackdowns including no more backdoor Roth contributions and new Roth RMDs after age 70 ½). Next week, we’ll look at the ugly, including the infamous proposed $3.4M “cap” on retirement accounts (which is actually far less restrictive than it has been made out to be in the media), and the potential elimination of stretch IRAs and Net Unrealized Appreciation (NUA) rules.

Of course, the caveat is that these tax proposals are just that – proposed – and most would require legislative action from Congress to implement... which may not happen anytime soon! Nonetheless, the proposals provide important insight into what the White House considers to be “bargaining chips” for tax reform going forward, which means there is at least some “risk” that they could be introduced into legislation (or attached to existing legislation) in the coming years!

What Michael’s Reading

Out and About

Thursday, March 5th, 2015

*Future of Financial Planning in the Digital Age @ Private Event

Tuesday, March 10th, 2015

*Understanding Longevity Annuities and their Potential Role in Retirement Income
*The Impact of Valuation-Based Asset Allocation on Retirement Income
*Future of Financial Planning in the Digital Age @ FPA San Francisco